Since the debt crisis in the 1980’s and the recent turmoil in emerging markets in the late
1980s, developing countries have changed their attitude towards FDI as it is believed that FDI
can contribute to the development efforts of a country. In general, if a firm decides to invest
in another country it is because of lower costs and higher efficiency. But the host country
can benefit not only from the better use of its resources, but also from the introduction
of new processes to the domestic market, learning-by-observing, networks, training of the
labor force, and other spillovers and externalities.